Treasury bonds are not irresponsible. What is irresponsible is to not hedge your interest rate risk in the form of interest rate swaps. Most other conventional banks do exactly that; they have a portfolio of held-to-maturity (HTM) securities that they hedge with interest rate swaps to avoid bearing that risk. In the financial sector, you only leave unhedged the investments you are _actually_ betting on; if you are to say that they were betting on 10y bonds (until maturity) holding the same value as the day they bought them, without any form of risk management, I would consider that irresponsible.
Its not as clear as treasuries are safe or not. The price function is clearly dependent on term.
long term treasuries are extremely risky assets, by definition and move a lot on interest rates. whereas short term treasuries like less than three momths barely move on fed rates, hence much safer.
Svb bank made the wrong choice of holding super long duration treasuries. They knew what they were getting into, and did it anyway for higher yield at that time. they could have put the money in 3 month expirations and wouldnt have been in this situation.
If you're a bank that can't differentiate/navigate long term vs short term debts while experiencing ballooning deposits, then yes I agree it's time to jump ship and find a new profession.
I don't see how the US economy is to blame for the actions of a greedy monoculture based on "tech line go up". They made a long term bet on bonds with historically low interest rates, doubling down that the party would continue indefinitely. They didn't have a chief risk officer for 9 months! How is that the US economy's fault?
There's a reason they lobbied congress to weaken risk regulations.
